Article 174 of the Saudi Bankruptcy Law
المادة 174 من نظام الإفلاس · الفصل التاسع: إجراء التصفية الإدارية: الإعلان عن التصفية الإدارية وتقديم المطالبات إلى لجنة الإفلاس
The article requires the Bankruptcy Committee to refer the matter to the relevant authority if it sees a need for further verification because of suspicion of a crime or violation in any claim or act.
Official text (Arabic)
This article has not been amended since the law was issued.
على لجنة الإفلاس -إذا رأت حاجة لإجراء مزيد من التحقق لوجود شبهة جريمة أو مخالفة منصوص عليها في النظام في أي مطالبة أو تصرف- إحالة الأمر إلى الجهة المعنية.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 174 explained in plain English
This article places a duty to refer on the Bankruptcy Committee during administrative liquidation.
When does the duty arise? If the committee sees a need for further verification because of suspicion of:
- a crime provided for in the Law, or
- a violation provided for in the Law.
In what? In any claim submitted by a creditor, or any act.
What is required? Referring the matter to the relevant authority. The text is in mandatory form ("the Bankruptcy Committee must"), so it leaves the committee no option not to refer once it sees a need for verification because of the suspicion.
Note that the article is satisfied with suspicion and the need for further verification, so it does not require the crime or violation to be proven, and it does not make the committee an investigating or adjudicating body, but limits its role to referral. The article does not specify the relevant authority or the procedures that follow the referral.
This comes in the context of the committee preparing the list of claims under Article 173. A person whose claim or act is referred may consult a lawyer specialized in bankruptcy and commercial matters, and may also need a lawyer in criminal matters.
Practical example
While reviewing claims in the administrative liquidation of an establishment in Riyadh, the Bankruptcy Committee noticed a large invoice from a relative of the owner with no visible supplies matching it, and saw a need for further verification because of suspicion of a violation. Here it must refer the matter to the relevant authority.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 174 of the Saudi Bankruptcy Law
What does the Bankruptcy Committee do if it doubts a claim?
If it sees a need for further verification because of suspicion of a crime or violation provided for in the Law, it must refer the matter to the relevant authority.
Must the crime be proven for the matter to be referred?
No. The text is satisfied with suspicion of a crime or violation and the need for further verification.
More articles on Administrative Liquidation
- Article 90
The court opens liquidation or administrative liquidation after financial restructuring ends if the debtor is distressed or bankrupt, the procedure's conditions are met, and the ending was for specified grounds.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب من ذي مصلحة- بافتتاح إجراء التصفية أو التصفية الإدارية إذا تحققت الشروط الآتية: أ - أن يكون المدين متعثراً أو مفلسا
- Article 122
The article sets out two cases in which the court ends the liquidation procedure at the trustee's request, allows it without a hearing, and provides for dissolving a debtor with legal personality.
1- تقضي المحكمة بإنهاء إجراء التصفية في الحالتين الآتيتين: أ- إذا تقدم الأمين بطلب إنهاء الإجراء لعدم كفاية حصيلة بيع أصول التفليسة للوفاء بمصروفات إجراء التصفي
- Article 123
The article requires the court to open administrative liquidation and refer the papers to the Bankruptcy Committee if it ended the liquidation because the sale proceeds were insufficient for its expenses.
تقضي المحكمة بافتتاح إجراء التصفية الإدارية للمدين إذا قضت بإنهاء الإجراء بموجب الفقرة (1/أ) من المادة (الثانية والعشرين بعد المائة) من النظام، وتحيل أوراق الدع
- Article 158
The article lets the court, of its own motion or at an interested party's request, open liquidation for small debtors or administrative liquidation after reorganization ends, on three conditions.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب ذي مصلحة - بافتتاح إجراء التصفية لصغار المدينين أو التصفية الإدارية إذا تحققت الشروط الآتية: أ- أن يكون المدين الصغ
- Article 164
The article requires the trustee to ask the court to end liquidation for small debtors as soon as it learns that proceeds from selling the estate's assets will not cover the procedure's expenses.
يلتزم الأمين بتقديم طلب إلى المحكمة لإنهاء إجراء التصفية لصغار المدينين فور علمه بعدم كفاية حصيلة بيع أصول التفليسة للوفاء بمصروفات إجراء التصفية لصغار المدينين
- Article 167
The article states that administrative liquidation aims to sell bankruptcy estate assets whose sale is not expected to produce proceeds enough for the expenses of liquidation or small debtor liquidation.
يهدف إجراء التصفية الإدارية إلى بيع أصول التفليسة التي لا يتوقع أن ينتج عن بيعها حصيلة تكفي للوفاء بمصروفات إجراء التصفية أو إجراء التصفية لصغار المدينين.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.